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Greedometer
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Author of : - Greedometer. Dow 5000. Why nobody sees it coming. and - Greedometer 2.0. The rats are jumping ship. Engineer, Fee-Only Investment Advisor, CFP. Owner of Triangle Wealth Management Creator of the Greedometer algorithms
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  • Advisers Are Getting It Wrong. Right On Time. Again.  1 comment
    Mar 12, 2013 3:46 PM

    When high proportions of advisers agree, they're usually wrong. That's true at stock market tops and bottoms.

    Secular (long term) stock market tops usually see a ratio of 3 bulls for every bear (or thereabouts). Last week's adviser sentiment data was just released (from Investors Intelligence). There were 2.66 bulls for every bear. Not quite 3X but we're getting there. The last time it was this high was early May 2011. You recall the Greedometer identified late April-early May 2011 as monumentally risky via the highest reading ever - 8000rpm. What came next was a quick nearly 20% drop in the S&P500. Sure it was stopped by more Fed & ECB monetary policy candy. You better count on that happening again if you remain long in risk assets (stocks, junk bonds, REITS, commodities) this summer.

    I've made no secret of the fact that an adviser sentiment ratio of 3 will likely be seen this April -- and that this will likely coincide with a new all-time high for the S&P500 (but not much higher than yesterday). That highly elevated Adviser Sentiment will be one of the signals the party has gone on too long.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Themes: market-outlook
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  • caupachow
    , contributor
    Comments (333) | Send Message
     
    Fed has no intension of easing and now several other countries are ramping up too. The UK and BoJ are almost giddy about printing. Although I have no longs and a few shorts I won't be surprised to see DOW 15,000. A correction is coming but it may be 2nd qt of 2014. Sideways market until then.
    13 Mar 2013, 12:03 AM Reply Like
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